Announcement PDF Globe Metals & Mining Limited (ABN 33 114 400 609) And Controlled Entities Annual Financial Report For the year ended 30 June 2023 CORPORATE DIRECTORY Directors Ms Alice Wong, Non-Executive Chairperson Mr Ricky Lau, Non-Executive Director Mr Bo Tan, Non-Executive Director Mr Michael Barrett, Non-Executive Director Mr Michael Choi, Non-Executive Director Company Secretary Mr Paul Hardie Senior Management Mr Grant Hudson, Chief Executive Officer Mr Rex Zietsman, Chief Technical Officer Mr Charles Altshuler, Chief Financial Officer Mr Paul Hardie, General Counsel and Company Secretary Principal & Registered Office 45 Ventnor Avenue West Perth WA 6005 Telephone: (08) 6118 7240 Facsimile: (08) 6323 0418 ABN: 33 114 400 609 Auditors Australia: BDO Audit Pty Ltd Level 9, Mia Yellagonga Tower 2, 5 Spring St Perth WA 6000 Malawi: Deloitte 1st FloorPCL House Kaohsiung Road Top Mandala Blantyre Share Registrar Automic Group Level 5, 191 St Georges Terrace Perth WA 6000 Telephone: 1300 288 664 Securities Exchange Listing Australian Securities Exchange (Home Exchange: Perth, Western Australia) Level 40, Central Park 152-158 St Georges Terrace Perth WA 6000 Code: GBE Bankers Westpac 109 St Georges Terrace Perth WA 6000 DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2023 The directors of Globe Metals & Mining Limited (‘Globe’ or ‘the Company’) hereby submit their report of the Company and its controlled entities (‘the Group’) for the financial year ended 30 June 2023. DIRECTORS The names and particulars of the Directors of the Company during or since the end of the financial year are: Alice Wong Bo Tan Ricky Lau Michael Choi Michael Barrett Non-Executive Chairperson Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director Directors have been in office since the start of the financial year to the date of this report unless otherwise stated. COMPANY SECRETARY Paul Hardie was appointed Company Secretary and General Counsel of Globe effective from 1 July 2022. Mr Hardie is admitted as a practitioner of the Supreme Court of Western Australia and the High Court of Australia, holds a Bachelor of Laws from Murdoch University and a Bachelor of Economics from the University of Western Australia. In addition, Mr Hardie has significant experience as a corporate and commercial lawyer advising public companies in the SME and ASX microcap sector across various industries and in the management of listed public companies having acted as Chairman and as a non-executive director of a number of ASX listed companies and is currently the Company Secretary of ASX listed company Matrix Composites & Engineering Limited. PRINCIPAL ACTIVITIES The principal activities of the Group during the financial year were to explore, develop and invest in the resource sector. The Group’s major project is the Kanyika Niobium Project in Malawi. There were no significant changes in the nature of the Group’s principal activities during the current year. RESULTS The consolidated loss after providing for income tax of the Group for the year ended 30 June 2023 amounted to $2.675 million (2022: loss of $2.780 million). MINERAL TENEMENTS The Group’s interests in mineral tenements as at the date of this report are as follows: Project Location Status Tenement Globe’s interest Kanyika Niobium (i) Malawi Granted LML0216/21 100% (i) Large-Scale Mining Licence Number LML0216/21 has been issued to Globe Metals & Mining (Africa) Limited dated 13 August 2021. The licence is valid for twenty-five (25) years and is subject to various conditions. REVIEW OF OPERATIONS Globe Metals and Mining Limited (Globe) is an Australian registered public company and has been listed on the ASX since December 2005 (ASX: GBE). The Company’s main operational focus is on the advancement of its Kanyika Niobium Project in Malawi (Africa) and the refinement of the processing of technical studies in Namibia. During the year, the Company announced that it had entered into a Mining Development Agreement (‘MDA’) through its ultimate wholly owned subsidiary Globe Metals and Mining (Africa) Limited, with the Government of the Republic of Malawi for the development of its Kanyika Niobium Project (Mining Licence LML0216/21) located in central Malawi, approximately 55km northeast of the regional centre of Kasangu (the Project). The approval of the MDA is a significant milestone in the Company’s history as it becomes the first company to execute an MDA with the Malawi Government since the enactment of the Mines and Minerals Act, 2018 (the Act). With all approvals now in place, the MDA allows the Company to accelerate its engagement with the Kanyika community to develop plans for the relocation of those affected by the mining process and ongoing community involvement. It will also provide confidence to third parties looking to participate in the Project in terms of financing and off-take. Globe Metals & Mining Limited & Controlled Entities Annual Financial Report 2023 3 DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2023 The MDA carries broader implications for the electric vehicle industry as it aims to facilitate the introduction of the fourth niobium mine in the world, and the first such mine into production in the last 50 years, and the first ever in Africa. It is expected that this will greatly alleviate the current geographic concentration of major niobium suppliers (with 2 in South America and one in Canada) resulting in the migration of existing supply chain risks for the industry as a whole. Key Aspects of the Mining Development Agreement (‘MDA’) The MDA will govern the relationship between Globe, the Malawi Government, and the people of Malawi in relation to the Project, and carries conditions regarding sustainable development and economic, social, and environmental investment. Its aim is to ensure that, whilst Globe expects to generate a profit from its investment and know-how, the Republic of Malawi and its people will benefit as well. The key aspects of the MDA are as follows: • Globe has the right to mine niobium, tantalum, and deleterious uranium at the Project, and to establish and operate a processing facility located in the Project area. • The MDA is subject to and conditional upon the Company obtaining: o a satisfactory ruling from the Malawi Revenue Authority in relation to the determination of gross revenue in respect of any product produced from the mining and processing of ore at the Project; and o an extension to the time limits prescribed under the Act for the commencement of substantial mine development, and substantial mineral production, at the Project to ensure those time limits are consistent with the timeline contemplated in the MDA. • Globe is required to make a decision to mine at the Project within 24 months of being granted the mining licence for the Project and obtaining a credit approved term sheet from a third-party international or domestic project financier (Project Lender) to secure the funds required to develop the Project. • Globe is obligated to spend at least US$200 million to develop the Project and shall commence expenditure within 6 months of making a decision to mine. • Globe is required to comply with all applicable foreign currency laws but is permitted to maintain one or more foreign currency accounts outside of Malawi to meet its foreign currency obligations to the initial Project Lender for a period of 7 years after the establishment of the relevant account or the date on which the Company has discharged all its obligations to the initial Project Lender. These obligations include (but are not limited to) the payment of interest and principal to the Project Lender, the payment of mandatory pre-payments to the Project Lender, and the establishment and maintenance of reserves as required by the Project Lender. • The Malawi Government is to receive, at no cost, a non-diluting 10% equity interest in the Project, with an option to acquire up to a further 10% equity interest (Equity Option) upon completion of the construction, commissioning, and start-up of operations at the Project as approved by the Project Lender. The Equity Option is a fully contributory interest and is capable of being diluted if the Government does not meet any call by Globe for additional equity funding. • The Malawi Government will receive a statutory royalty of 5% of all revenue earned from the mining and processing of ore at the Project. The Kanyika community will receive a royalty of 0.45% as prescribed under the Act. • Globe is required to maintain a ratio of indebtedness to net worth that is equal to or lower than 3:1 at all times. • Prior to commencing construction of the Project, Globe must pay a $1 million environmental bond to secure performance of its obligations to comply with all applicable environmental laws. • Globe is responsible for the resettling of affected Malawi citizens in accordance with an approved resettlement framework. • Globe shall commit to the preferential employment and training of Malawi citizens for operations and unskilled labour positions at the Project, and in the areas of financial, accounting, technical, administrative, supervisory, managerial, and executive positions (subject to applicants having the necessary skill and experience and being suitable for those roles). • Globe shall also preferentially procure goods and service from local Malawi businesses provided that those goods and services are at least comparable in terms of quality, delivery, service, quantity, and price. • Globe will be exempt from import duty and import excise and a shall be zero-rated for VAT on the import of capital goods, consumables and services throughout the term of the life of the Project. • Globe will enjoy the benefit of a stable tax regime for up to 10 years from the date of execution of the MDA. Globe Metals & Mining Limited & Controlled Entities Annual Financial Report 2023 4 DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2023 Globe received a letter from the Malawi Government Department of Mines on 29 May 2023, endorsing the ongoing efforts of the Company to acquire and mobilise resources for the Kanyika Niobium Project, and assuring the continued security of the tenure for the mining license LML0216/21. The letter states that following the signing of the MDA on 29th March 2023 between the Government and Globe that: • Mine development will commence 18 months from the date of signing of the MDA versus 18 months from the mining licence date of 13 August 2021; and • Substantial commercial mineral production at the Kanyika Niobium site shall commence within 60 months from the date of the signing of the MDA versus 60 months from the mining licence date of 13 August 2021. The MDA remains subject to and conditional upon the Company obtaining a satisfactory ruling from the Malawi Revenue Authority. External advisors have been appointed to set up the transfer pricing protocol but at this stage no submissions have been made to the Malawi Revenue Authority. Progress made on the Kanyika Niobium Project During the year, the Company made significant progress with its Kanyika Niobium Project. Key highlights include: • Selection of critical vendors - Globe announced in June 2023 that it had selected six highly experienced vendors to advance the Kanyika Niobium Project including: Solo – for the design and construction of the mineral processing plant; TCM - to design the refinery process for the Kanyika concentrate and to determine the design parameters of the refinery; o The Resonant Group - to complete the engineering drawings for the refinery; o Geolabs Global - as the laboratory to process the Kanyika ore to concentrate; o S.R. Nicholas Ltd - to provide the preliminary design and civil engineering of the plant; and o EDS – to develop a horizontal multi-shaft mill. In May 2023 the Company announced it had successfully completed its 10-tonne sampling program from an outcropping at surface at the Kanyika Niobium Project. The 10-tonne sample will accelerate important metallurgical testing and will enable the Company to: o determine the operating parameters for the implementation of chlorine gas-vapour technology for the extraction and refining of Kanyika concentrate materials; o confirm the process to recover metals at a rate of >95% and to produce oxides with a grade of >99.5%; • confirm the potential suite of finished products viz. Nb2O5, Ta2O5, ZrO, FeO; and o produce the engineering parameters for the design, construction and operation of the pilot plant used for the Phase One plant in support of the Scoping and Feasibility Study work. The 10-tonne sample will also produce +/- 30 x 1kg commercial-grade samples to provide to interested parties and allow the Company to expedite discussions with potential offtake partners (battery producers and Nb and Ta metal refiners). o o • Next steps Globe can now focus on the next key priority of raising development financing for this important mining project which stands as the only vertically-integrated niobium producer outside the Americas. In addition to this, Globe can focus on finalising key milestone processes such as the relocation of the project-affected persons and entering into contracts for the provision of mine plant and equipment. As announced on 19 August 2021, the Definitive Feasibility Study (DFS) presented metrics of average annual production of 3,250 tonnes of Nb2O5 and 140 tonnes of Ta05 on pre-production capital costs of US$250m (US$200m on the mine and US$50m on the refinery) creating a net present value of US$1 billion at a discount of 8% per annum with a payback of approximately 18 months from first production. Between 18 and 36 months after the decision to mine with ramp up to DFS levels by 60 months, Globe will take a phased approach to construction and operations to enable the Company to scale up operations to build its business and customer base starting at 90,000 tonnes per annum (18 months) increasing to 200,000 tonnes per annum (24 months) with the introduction of the solar panels and batteries to run the grinding and crushing while using the 500kva constraint on the concentrator that can run 24/7 (Kanyika Niobium Project Brief Update-refer ASX announcement: 25 July 2022 and the Company’s Annual Report - refer ASX announcement: 28 October 2022) potentially producing an average annual production of 756 tonnes of Nb2O5 and 37 tonnes of Ta05 on preproduction capital costs of US$35m (to be confirmed by the revised DFS). Globe will start a Feasibility Study to support the capital cost estimate, operating cost summary, and financial model on Globe’s Namibia plant as a part of its downstream strategy as well as submit a revision of the DFS. Since completion of the DFS, a new type of mill has come on the market that uses 80% less power than a conventional ball mall. This mill reduces ore to 80% below 1mm. As a result, Globe also intends doing spiral gravity tests on this milled ore with the intent of discarding waste product prior to final bore milling thereby potentially reducing the cost of production. Key works programs currently underway in Namibia in relation to the Company’s proposed Walvis Bay Refinery Project will be escalated. A screening study, which will form the basis of the eventual scoping study, will be submitted to the relevant Namibian authorities in accordance with terms of local environmental legislation. This study will determine the terms for the Environment and Globe Metals & Mining Limited & Controlled Entities Annual Financial Report 2023 5 DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2023 Social Impact Assessment (ESIA) process, including specific specialist studies and areas of concern for a full ESIA (starting with a scoping study) and any additional specific studies that may need to be undertaken. Given the relatively opaque nature of the niobium oxide markets Globe will engage with the Commissioner General to discuss a fair and equitable process for the determination of Gross Revenue in line with the provisions of the existing Taxation Act. In addition, consultants will be engaged to assist Globe to formalise a Transfer Pricing Policy in line with OECD guidelines such that pricing transparency and integrity is established and maintained. Statement of Mineral Resources On 11 July 2018, Globe published an updated Mineral Resource Estimate for the Kanyika Niobium Project (KNP) calculated in accordance with 2012 JORC guidelines. The resource calculated was unchanged from the previous Mineral Resource Estimate published on 7 January 2011, calculated in accordance with the 2004 JORC guidelines, and is as follows: Category Measured Indicated Inferred Total Size (Mt) 5.3 47.0 16.0 68.3 Nb2O5 Grade (ppm) 3,790 2,860 2,430 2,830 Ta2O5 Grade (ppm) 180 135 120 135 U3O8 Grade (ppm) 110 80 70 80 Table 1: Mineral Resource Estimate for Kanyika using a 1,500 ppm Nb2O5 cut-off grade No additions or changes have been made to the Mineral Resource Estimate since it was last published. Exploration Results, Mineral Resource and Ore Reserve Estimation Governance Statement Globe Metals and Mining Limited ensures that exploration results and Mineral Resource estimates are subject to appropriate levels of governance, internal controls and external independent review. The exploration results and Mineral Resource estimation of the Company’s projects are subject to appropriate procedural controls and systematic internal and external technical review by competent and qualified professionals on an as needed basis. These reviews have not identified any material issues undertaken as part of a formal risk assessment. The Company periodically reviews the governance framework in line with the business expectations. Exploration results and Mineral Resource estimates referred to in this report were undertaken in accordance with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC) 2012 Edition. Competent persons named by the Company are members of the Australian Institute of Mining and Metallurgy and are qualified as competent persons as defined in the JORC Code. Qualifying Statements Mineral Resource Estimates The information in this report that relates to Mineral Resources is extracted from the report titled “Kanyika Niobium Project – Updated JORC Resource Estimate” released to the Australian Securities Exchange (ASX) on 11 July 2018 and available to view at www.globemm.com and for which Competent Persons’ consents were obtained. Each Competent Person’s consent remains in place for subsequent releases by the Company of the same information in the same form and context, until the consent is withdrawn or replaced by a subsequent report and accompanying consent. The Company confirms that is not aware of any new information or data that materially affects the information included in the original ASX announcement released on 11 July 2018 and, in the case of estimates of Mineral Resources, that all material assumptions and technical parameters underpinning the estimates in the original ASX announcement continue to apply and have not materially changed. The Company confirms that the form and context in which the Competent Persons’ findings are presented have not been materially modified from the original ASX announcement. Full details are contained in the ASX announcement released on 11 July 2018 titled “Kanyika Niobium Project – Updated JORC Resource Estimate” available to view at www.globemm.com Forward Looking Statements This report may include forward-looking statements. Forward-looking statements include, but are not limited to, statements concerning Globe Metals & Mining Limited’s business plans and other statements that are not historical facts. When used in this report, words such as could-plan-target-estimate-expect-intend-may-potential-should and similar expressions are forward-looking statements. Any forward-looking statements have been prepared on the basis of a number of assumptions which may prove incorrect and the current intentions, plans, expectations and beliefs about future events are subject to risks, uncertainties and other factors, many of which are outside Globe Metals & Mining Limited’s control. Important factors that could cause actual results to differ materially from the assumptions or expectations expressed or implied in this report include known and unknown risks. Because actual results could differ materially to the assumptions made and the Company’s current intentions, plans, expectations and beliefs about the future, you are urged to view all forward-looking statements with caution. This content should not be relied upon as a recommendation or forecast by Globe Metals & Mining Limited. Content within this report should not be construed as either an offer to sell or a solicitation of an offer to buy or sell shares in any jurisdiction. Globe Metals & Mining Limited & Controlled Entities Annual Financial Report 2023 6 DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2023 INFORMATION ON DIRECTORS Alice Wong Non-Executive Chairperson Special Responsibilities Member of Nomination and Remuneration Committee Qualifications B. Bus in Accounting and Finance Ms Alice Wong is an accountant by training and commenced her career with Price Waterhouse. After more than a decade of service in the investment banking industry in Asia working for large multinational companies Morgan Stanley, ABN AMRO Rothschild and BNP Paribas Peregrine, Ms Wong extended her entrepreneurial endeavour into luxurious products and health care companies. Ms Wong invested into Globe via Apollo Metals Investment Co. Ltd during 2014 and has since served as the Non-Executive Chairperson of its Board of Directors where she has played an integral role in advancement of the Kanyika Project including the granting of the mining licence in August 2021. Ms Wong holds a Bachelor of Business Administration in Accounting and Finance from the University of Hong Kong and is a member of the American Institute of Certified Public Accountants (AICPA). Interest in Shares and Options Shares - 351,405,158 (1) Directorships of other ASX Listed Companies in the past 3 years Nil (1) Ms Wong is the sole shareholder and Director of Apollo Metals Investment Co. Ltd which holds 351,405,158 shares in the Company. Bo Tan Non-Executive Director Special Responsibilities Chairperson of Audit and Risk Committee Qualification BEcon - Renmin China, MBA - Thunderbird USA, M.A University of Connecticut Experience Mr Tan has approximately 20 years’ experience as a senior manager and director in financial planning, reporting, investment, capital structure and industrial research; and has worked for companies such as Bohai Industrial Investment Fund, Lehman Brothers Asia and Macquarie Securities Asia, and across international markets in China, Hong Kong, Canada and USA. Interest in Shares and Options Shares - 34,972,690(2) Directorships of other ASX Listed Companies in the past 3 years Options – 1,250,000 Nil (1) Mr Tan a shareholder and Director of Triple Talent Enterprises Ltd which holds 34,972,690 shares in the Company. Ricky Lau Non-Executive Director Special Responsibilities Chairperson of Nomination and Remuneration Committee Qualifications MBA Kellogg-HKUST, BCom UBC (Hons) Experience Mr Lau has over 20 years’ experience in private equity investment in Asia and is presently the Managing Partner of private equity real estate firm Crane Capital Limited. Interest in Shares and Options Directorships of other ASX Listed Companies in the past 3 years Options – 1,250,000 Nil Globe Metals & Mining Limited & Controlled Entities Annual Financial Report 2023 7 DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2023 Michael Barrett Non-Executive Director Special Responsibilities Member of the Audit and Risk Committee Member of the Environment, Society and Governance Committee Qualifications BSc.(SocSci) Joint Honours - Accounting and Economics, Fellow of The Institute of Chartered Accountants in England and Wales, Graduate of the AICD Experience Mr Barrett has over 30 years’ international experience in strategy, capital markets, investor relations, and risk management. Mr. Barrett has extensive experience working in the energy and resources industry having held senior mining sector roles in Western Australia, including with Rio Tinto Iron Ore and WMC Resources Ltd. Most recently, Mr Barrett was National Lead Partner for Deloitte’s Risk Advisory Energy and Resources practice, specialising in Board Advisory and Risk Management for many of the largest mining and energy and resources companies nationally, prior to establishing his own consulting business, helping develop smaller businesses across the energy and resources industry. Mr Barrett is a Graduate of the AICD and is the Lead Independent, non-executive director and Chair of the Audit Committee with dual listed (TSX and ASX) Novo Resources Corp (TSXASX Code: NVO). Interest in Shares and Options Directorships of other ASX Listed Companies in the last 3 years Options – 1,250,000 Novo Resources Corp (TSX/ASX: NVO), non-executive director, appointed on 20 October 2017. Entyr Limited (ASX: ETR) (previously Pearl Global Limited (ASX: PG1)), non-executive director, appointed on 6 August 2018 and resigned 15 February 2023. Michael Choi OAM Non-Executive Director Special Responsibilities Chairperson of Environment, Society and Governance Committee Qualification BEng (Civil) University of Queensland Experience Mr Choi is a professional chartered engineer specialising in property development, project management and construction. Mr Choi also has extensive experience in trade development, community engagement, cross cultural communication, relationship management and negotiations with governmental agencies. Mr Choi is a former member of parliament of Queensland and held the position of Parliamentary Secretary (assisting on ministerial matters) with portfolios including natural resources, mines and energy, trade as well as multicultural affairs. He was the first AsianAustralian elected to Queensland parliament. With this background he is therefore experienced in mining includes policy setting, governance, regulations, negotiation with authorities, project assessment, feasibility, CAPEX, all acquired in his Assistant Minister role in the Queensland Government with mines and energy portfolios. In his career, Mr Choi was recognized with multiple awards, including the Medal of the Order of Australia (OAM), and Lord Mayor’s Business Award. Interest in Shares and Options Directorships of other ASX Listed Companies in the past 3 years Options – 1,250,000 Nil Globe Metals & Mining Limited & Controlled Entities Annual Financial Report 2023 8 DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2023 REMUNERATION REPORT - AUDITED This remuneration report for the year ended 30 June 2023 outlines the remuneration arrangements of the Group in accordance with the requirements of Corporations Act 2001 (the Act) and its regulations. This information has been audited as required by Section 308(3C) of the Act. The remuneration report details the remuneration arrangements for Key Management Personnel (KMP) who are defined as those persons having authority and responsibility for planning, directing and controlling the major activities of the Group, directly or indirectly, including any director (whether executive or otherwise) of the parent. For the purposes of this report, the term “executive” includes the Managing Director (MD), executive directors (where applicable) and senior executives of the Group. A. Remuneration Governance The Board of Directors has established a Committee for the purpose of reviewing and making recommendations with respect to the remuneration practices of the Company. The Committee comprises Mr Lau (Chairperson of the Nomination and Remuneration Committee since 14 December 2021), Ms Alice Wong and Mr Grant Hudson. The Board of Directors has prepared and approved a charter as the basis on which the Committee will be constituted and operated. The role of the Committee is to provide a mechanism for the determination, implementation and assessment of the remuneration practices of the Company, including remuneration packages and incentive schemes for executive Directors and senior management, and fees payable to Non-Executive Directors. The Committee is primarily responsible for making recommendations to the Board on:  the overarching executive remuneration framework;  the operation of incentive plans (if any) which apply to the executive team, including key performance indicators and performance hurdles;  the remuneration levels of executive directors and other KMP; and  the fees payable to non-executive directors. The Committee’s objective is to ensure that remuneration policies and structures are fair and competitive, and aligned with the longterm interests of the Group. The Corporate Governance Statement on our website (www.globemm.com) provides further information on the role of the Remuneration Committee. B. Remuneration Policy The remuneration policy of Globe Metals & Mining Limited and its Controlled Entities has been designed to align Director and executive objectives with shareholder and business objectives by providing a fixed remuneration component which is assessed on an annual basis in line with market rates and offering specific incentives, from time to time, that are based on share price and key performance areas affecting the Group’s financial results. The Board of Directors of Globe believes the remuneration policy is appropriate and effective in its ability to attract, retain and motivate suitably qualified and experienced Directors and executives to run and manage the Group, as well as create goal congruence between the Directors, executives and the